By Brad Thomason, CPA
The amount of Social Security related content on Youtube, and the internet at large is to me, astounding. Pretty much everything you need to know is summed up in a few pages, available directly from the government (both the Social Security Administration and the IRS). Yet there is a seemingly endless stream of repetitive content flowing to online outlets; and, one must assume, an eager audience for it.
I’m no expert on everything that is out there, but the gist of a lot of it seems to be how to get the greatest possible benefit. Which as a stand-alone proposition is certainly reasonable.
But my concern is the part that is unspoken. Because I think a lot of this content is aimed at folks trying to come up with some sort of plan to retire (ideally early) that just barely squeaks by as theoretically workable, and they are looking to some Social Security “hack” to somehow provide the last little nudge to get them there.
Folks, if you are thinking that an extra $100 or $200 a month from Social Security is going to be the thing that gets you over the hump, let me just go ahead and tell you. It isn’t.
That’s because there aren’t any circumstances (that I can think of) where that small a swing is a reasonable basis for determining something ought to be close-enough to work. That’s the case irrespective of whether the money comes from Social Security, or anywhere else (yes, I’m looking at you, dividend “experts”).
To be comfortable that you can reasonably hang up your spurs, you need a whole lot more margin for error than that. The big questions in retirement management are interested in whether or not you can keep things going for twenty years or twenty five years or thirty years. Not whether you can wiggle and contort enough to make year one work.
Year one should be a given. So should years five, and ten, and fifteen. If they aren’t, you are not even approaching the realm of a secure position. Retirement should not be an imminent event for you.
Don’t think that I’m telling you that you should be willfully ignorant about the inner workings of Social Security. Don’t think I’m proposing that you should just accept less than you could get. Don’t think that I’m suggesting that Social Security is an unimportant input. For most folks it is in fact a very important input.
But it’s only one important input, and it is not the one that financially secure people rely upon to provide pull-able levers, flexible tactics and cushions against monetary shocks as they navigate retirement. It’s more like the thing in the background that you take as a given, and build from there.
So to end where we started, Social Security minutia is not where you need to be focusing your attention. If you don’t have a clear-cut case for retiring with just the minimal, basic benefit from Social Security, then you already know what you need to know, for the moment. The rest of your equation is not far enough along to be considering a near-term retirement, in the first place. Work on those other parts instead, be realistic about the size of the resource base you actually need for a robust financial position, and accept that getting there may take some more time.
Once all of that is done, as something in the spirit of an after-thought, if you can figure out a way to wring a couple of extra bucks out of Social Security, so be it. But treat it like a final snack after dessert, not any of the earlier, more substantive courses. Certainly not the focus of the meal.
Otherwise you stand to make a big mistake (forfeiting your ability to get a paycheck) at the point in your life when you have the fewest options available to make up the difference. That’s a tough one to contemplate, especially when it is completely avoidable in most circumstances.
Plus, you’ll waste a lot less time on Youtube. Or at least have more time for watching cat videos (which is another thing I really don’t understand).
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